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s the Massachusetts real estate landscape shifts, a glimmer of hope emerges for prospective homebuyers in 2025. With inventory levels expected to marginally increase, buyers may finally catch a break from the intense competition that has characterized the market in recent years. However, demand remains high for single-family homes, driven by a robust economy and favorable demographics.

    According to The Warren Group, Massachusetts saw a 1.6% increase in single-family home sales through November 2024, with a total of 34,784 transactions. While this represents a slight uptick from the previous year's historically low sales, the statewide median sales price has surged by an impressive 8.2%, reaching $616,925.

    Mortgage rates have been a double-edged sword for buyers. A decline in rates during the fall helped to stimulate demand, but recent increases have pushed the average 30-year mortgage rate closer to 7%. Experts predict that interest rates will become more favorable in 2025, potentially dropping to high 5% and low 6% by year's end.

    Realtors are bracing for an early and busy spring market, with Nicole Rideout Hartwick of Gibson Sotheby's International Realty predicting a surge in demand and competition. "Almost 80% of buyers were sidelined in the fall due to the election and interest rate uncertainty," she notes. "This will bring a significant increase in demand and competition to the market."

    New construction is struggling to keep pace with demand, particularly for properties priced below $1.5 million. Stewart Young, principal at LandVest, attributes this to a lack of new development, despite record sales levels in many New England markets. "Buyers continue to value good schools, access to amenities, and reasonable commuting," he notes.

    Suburban markets have been extremely competitive, with record sales prices and a preference for properties located in town or village centers. Cities and larger towns are also seeing a trend towards walkability and proximity to amenities.

    Interest rates and inventory will be key factors shaping the 2025 market. Hartwick predicts that interest rates will become more favorable, while Young is more cautious, citing uncertainty surrounding the new administration's policies. Kim Williams, a Realtor with Gibson Sotheby's International Realty, highlights low housing inventory as the biggest obstacle for buyers, particularly first-time homebuyers.

    Despite improving inventory levels, experts agree that sellers will maintain an advantage in the market. "Buyers will benefit from increasing inventories, but demand continues to outstrip supply," notes Young. Climate-related risks, such as sea level rise and storm surge, are also becoming increasingly concerning for real estate owners and buyers.